Making the most of your compensation and benefits package isn’t a one-size-fits-all solution. Forgoing short-term benefits in favor of longer-term opportunities can help establish and grow a powerful financial foundation. For example, consider a health savings account (HSA) couple with a high deductible health plan. If you can afford to pay out-of-pocket medical expenses, you can preserve the pre-tax funds in the account as a tax-advantaged long-term savings vehicle.

Nonqualified deferred compensation plans (NQDC) can be a powerful tool to help you reach your saving goals in a tax efficient manner. It's important to weigh the benefits and risks before making a decision. Although plans vary from company to company, essentially they enable you to defer a portion of your income and establish when you want to receive the money. Plans are set up to grow your money while taxes are deferred, and you can determine annually whether you wish to participate and how much of your income you'd like to defer.

When choosing your strategy, you will need to make decisions on how much you contribute, how the money will be invested, and have a clear plan on when you want to receive it. Unlike with a 401(k), once you've chosen to defer your income the decision is irrevocable. However, because you get to decide when you want to have access to your money, you can withdraw money from your NQDC plan when it becomes available.

As you progress through your career, you may find a considerable portion of your income tied to company performance, which can lead to stock concentration. If you achieve insider status, you'll be subject to trading restrictions and minimum holding requirements.

To minimize some of those issues. consider beginning a diversification strategy before portfolios have significant concentration and trading becomes too restrictive. When selling stock isn’t an option, you might consider gifting stock rather than cash to family members or charity, using stock as collateral or participating in hedging strategies. A 10b5-1 trading plan that lets you sell shares according to a predetermined written plan could help minimize reputational risk and accusations of insider trading.

Starting early and creating a plan to diversify your portfolio can enable you to focus your attention on the power of your wealth and the legacy you can achieve.

Taking a few intentional steps and formalizing a plan to secure your assets and your estate helps protect your legacy. This could mean shielding assets from creditors and mitigating the tax impact on your beneficiaries.  Various kinds of insurance- life insurance, long-term-care insurance and excess liability coverage-can all play a role in helping to protect assets and provide liquidity.

Optimally, your assets and insurance should be owned in structures that balance accessibility and protection from creditors and taxes. More complex planning strategies may involve placing assets in certain types of trusts.
 

Alternative liquidity solutions can generate the funds needed to pay taxes without tapping into your portfolio or savings and disrupting long-term financial goals. Here are a few options that offer on-demand access to cash or retained cash reserves that are worth researching further:

• Private Client Line account (PCL). If you have a significant portfolio of eligible investments, Private Client Line account that allows you to borrow against the value of your eligible assets.
• Home Equity Line of Credit (HELOC). If you have equity in your home, you can borrow against the available equity with a HELOC. Total available credit is based on a percentage of your home's value, less any amount you still owe on your home.
• Custom Lending. Specialized assets allow you a range of liquid illiquid assets as collateral to obtain additional liquidity.

Tax‑free distributions from a Roth 401(k) can be especially valuable for creating tax‑free income in retirement, though they come with the trade‑off of forgoing the current tax deductibility of contributions. A good starting point is to fully participate in your employer‑sponsored retirement plan using pre‑tax (deductible) contributions, Roth contributions, or a combination of both, particularly to take full advantage of any employer match. For many investors, especially higher‑income earners, the short‑term cost of paying taxes today may be outweighed by the long‑term benefit of locking in current tax rates and avoiding income taxes on qualified retirement withdrawals.

In 2026, participants may contribute up to $24,500 annually to their 401(k), whether pre‑tax, Roth, or a combination of the two. Those age 50 or older may contribute an additional $8,000, and participants ages 60 through 63 may be eligible for a higher catch‑up contribution of up to $11,250, depending on plan provisions.

Roth 401(k)s and Roth IRAs are not subject to required minimum distributions (RMDs) during the account owner’s lifetime, unlike traditional IRAs and 401(k)s, which generally require distributions starting at age 73 (increasing to age 75 in 2033 for those born in 1960 or later). By allowing assets to remain invested and grow tax‑free, Roth accounts can offer greater flexibility in managing retirement income, taxes, and cash flow, and may also support estate‑planning goals, as beneficiaries generally receive Roth distributions free from income tax.

Ultimately, maintaining a mix of pre‑tax and Roth balances can provide meaningful flexibility in retirement. If you expect to be in a similar or higher tax bracket in retirement, value tax‑free income, or want greater control over taxes and withdrawals later in life, incorporating Roth 401(k) contributions as part of an overall strategy may be worth considering.